A statistical probability cone that forecasts potential future price ranges using log returns, volatility, and inverse normal distribution across multiple confidence levels.
Explore complementary indicator rolesHow it works
The Log-Normal Price Forecast indicator creates a probability cone by analyzing market volatility through log returns, smoothed using Volume Weighted Moving Average (VWMA). It calculates potential price ranges using inverse normal distribution, anchoring the forecast to the first bar of a selected higher timeframe.
The indicator generates five customizable confidence levels, ranging from 30% to 99.9%, which represent different statistical probabilities of future price movement. Users can manually adjust the trend angle and model length, with a default sample size of 100, allowing for flexible and nuanced market analysis.
Why it may be useful
This indicator provides traders with a sophisticated statistical approach to understanding potential price trajectories, moving beyond traditional trend analysis by quantifying probabilistic outcomes. By visualizing potential price ranges with varying confidence levels, traders can make more informed decisions about market direction and potential volatility.
The probability cone helps traders assess market conditions, distinguishing between sideways and trending markets. When prices remain within the 30% confidence zone, the market is likely range-bound, while movement outside this zone suggests a stronger trending environment, enabling more strategic trade planning.
When to explore it
The Log-Normal Price Forecast is most effective in markets with clear directional trends and moderate to high volatility, where statistical forecasting can provide meaningful insights. It works best when used on higher timeframes like 4-hour, weekly, or monthly charts, which offer more stable and reliable predictive information.
Traders should exercise caution and avoid using this indicator for mean reversion trades without a comprehensive understanding of its mechanics. It is particularly useful for day and swing traders who want a probabilistic view of potential price movements, helping them identify potential entry and exit points with greater statistical confidence.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
